What is Group Health Insurance?
Group Health Insurance is a selected plan that provides health care to a predetermined, select group of people. These health insurance plans are generally uniform in policy offering the same health care coverage to all employees or members of the group.
Is Group Health Insurance a Good Investment For My Small Business?
The answer to that is in short: No.
Group Health Insurance is a poor choice of insurances for many reasons, but namely because of the price of the insurance and the time and resources it takes to manage a group healthcare plan for several to many employees, depending on the size of the company.
So what problems does Group Health Insurance have? We are here to explore some of those problems that it imposes here in this post:
The average Group Insurance Plan as of 2015, according to the Kaiser Family Foundation (KFF), will see the business paying about 83% of the costs and the employee paying the other 17% This meant that the employer was paying an average of $6,251/year per employee that they had to cover with health insurance and the employee was paying the other $1,071 out-of-pocket. These costs have risen dramatically over time and that trend is likely to continue well into the future.
If the employee’s family is to get health care coverage as part of the plan, that cost will run about $17,545 for the average family as of 2015. Again, that cost is likely to rise in the future. For this plan, the average employer was paying 71% of the cost or $12,591/year and the employee was paying 28% or $4,955/year.
This mean that costs for Group Insurance Plans for small businesses have risen 91% between 2009 and 2015. It shows no signs of slowing down.
Selecting a Group Health Care Plan for your business means that someone within the company has to take the time to manage and do all the organizational work that comes with providing employees with these benefits. This can be a cumbersome, time-consuming task that takes up many man-hours of work. While the employees at the company are managing HR-related things like employee health care plans, it is taking away from the time that that employee can be spending on things like improving their products or providing customers with quality service, which can hurt the business’s profitability and bottom line.
Moreover, newer companies can make errors in their insurance plans and cost employees coverage, or create additional headaches for the company to have to sort out if something goes wrong. If someone is not experienced in handling Hr-related tasks, managing a group healthcare plan can be a very daunting task. Many small business owners would not even know where to start if they had to manage these kinds of things on their own. It is also not reasonable to expect to hire an entire HR department to manage things like this as that would be a great expense to a small company that many startups cannot afford.
Losing Employees/Having Trouble Attracting Talent:
Many employees are going to have to go look for new jobs if their small businesses are only offering group healthcare plans. Group health care plans are not the best coverage and are also very expensive for the employer as well as the employer. One costly claim against the insurance for a hefty medical bill or a long hospital stay causes everyone to have pay much more for coverage. This will result in many employees not being able to stay with the company long-term, because they need better benefits than what are being offered. Moreover, even if the person likes the job they cannot afford to pay the premiums put on them by group healthcare plans.
At the same time as you may lose employees, it will also deter many new, talented employees from joining the business. If there are no good benefits and it’s not a productive job that makes the employee good money they are likely to go look elsewhere for work. Other companies that are larger ins size will provide better benefits than can be found in group healthcare plans. This can cause the company to have trouble finding new talent to help the company grow and prosper in the future.
Constantly Rising Premium Costs:
As previously stated, costs for group health care plans have shot up by a staggering 91% between 2009 and 2015. That trend is likely to continue well into the future as healthcare becomes more and more expensive as time goes on. Eventually, small businesses are not going to be able to afford healthcare for their employees at all, at least not through group health insurance plans.
What is An Employer To Do?
Fortunately for the small employer, there are other more viable options out there than group health care plans. One such option is a plan like that provided through the Design Health HRA plan. These plans stand for Health Reimbursement Arrangement (HRA) and this allows both employers and employees to save on the ever-rising costs of insurance. These programs work by using an employer-funded model to provide reimbursement for employee medical expenses. Depending on the design of the plan, this can save small businesses a significant amount of money and make health care more affordable for the employer and the employee alike.
For more information on Design Health HRA Plans and alternatives to help you save on healthcare for your employees and small business please feel free to contact us.